I was digging around and looking at the OLD stuff that came out on the HCL back in 2007...Couple of things we seen the news today that is in the follow:
Latest on the Iraq petroleum law- June, 2007
I have given this June draft text a first reading, explored the source of it and come to the following tentative conclusions:
This June petroleum draft represents a step in the right direction as it has placed the Federal government, the Council of Ministers, its Oil and Gas Council (FOGC) and its think tank in a stronger decision making position visa vis the regions and governorates. It also widened the bidding to ensure covering procurements by the operating companies and enhanced the transparency aspects. It has deleted the shameful clause which required the makeup of members of the FOGC to conform to the sectarian and ethnic division.
And, it has clarified and strengthened the Federal government role over attachments 3 (discovered but undeveloped far from the present pipeline system) & 4 (the 65 exploration blocks) as it spelled out firmly INOC’s participation therein. However, it seems to have slipped in its authorising INOC to enter into "other forms of contracts" beside the service model contracts.
It has tightened the legal language and placed, justifiably, some of the definitions into the articles concerned.
Its main weaknesses, among others, is leaving the development of discovered fields in attachment 3 and future exploration as in attachment 4 to the to regions and governorates. Furthermore, it left unchallenged (a cause for change in the constitutional review) the interpretation of article 112 of the constitution, by exclusion, under the jurisdiction of the of the Regions and Governorates.
It is also surprising that it has ignored the vital verdict of al-Shoura Council that: examination of the draft petroleum law by the parliament ought to be deferred until such time when the review of the constitution is finalised.
But this June draft appears, more or less, in line with the Majles al-Shora'a commentary. As such, the political power pockets who indulged in the self-oriented mutual concessions of the infamous "Muhasasa" would likely reject it and insist on their Feb/March text.
The pivotal question, however, remains: is the judgement of the Majles al-Shoura'a binding on the government or not? It remains to be seen.
Having read the latest from KRG, I must add, however, that it would be a great folly if this illegal declaration of KRG and pursuit to go ahead, unchallenged, with their own grant of rights for exploration and development of additional 40 exploration blocks, as if they are no part of Iraq State; apparently returning to their old interpretation of the constitution that "what is in Kurdistan is theirs to manage their own way." They seem to forget that they have been living on the oil production from the south for the last few years. That is how it should be as oil and gas wealth are God’s gift to the nation all the nation not any one part of it.
Tariq
TES/2nd July, 2007.
Covering Letter
1- Internal Memo
No. ………….
11. 06 2007
Republic of Iraq
Council of Ministers
To: The Secretary of the Council of Ministers
Subject: Oil and Gas Law Project
Proposing Authority: Oil and Energy Committee
Subject: Oil and Gas Law Project
Reasons: To develop the Oil Industry through the participation of foreign and local investors of reliable operational and technical competence that would help develop the technical national capabilities in the petroleum sector. Also to provide the Provinces and Governorates a role in petroleum operations and ensure participation by the commercial entities including an independent commercial national Iraqi oil company and the encouragement and support of the national private sector to participate directly or indirectly in the oil and gas sector.
Procedure:
First: The Council of Ministers has in its extraordinary session on 26/2/2007 decided to refer the Project of Oil and Gas which had been prepared by the Oil and Energy Committee to the Advisory Council for review with the entities concerned. The Project was sent to the Council in accordance with a letter dated 28/2/2007.
Second: We have received the internal memorandum from the Ministries Affairs Department dated 6/6/2007 with a letter from the State Advisory Council No. 911 dated 31/5/2007 to which was attached the oil and Gas Project with its 4 Enclosures after having reviewed these documents in the presence of representatives from MoO and made the (13) comments in its above mentioned letter.
Third: We propose the submission of the subject to the Judicial Committee in preparation to submitting to the Council of Ministers for further action towards its enactment after having taken due consideration of the comments from the Advisory Council in its letter referred to above and especially comments (1, 2 and 6) of the letter.
2- The Verdict
Republic of Iraq
Ministry of Justice
State Advisory Council (Shoura Council)
Council of Ministers Secretariat – Legal Office
Subject: Oil and Gas Law Project
The best of Greetings,
Reference to your letter No. …….. dated 28/5/2007, we send you back the Oil and Gas Project and its four enclosures Nos. (1), (2), (3) and (4) after having been reviewed by the State Advisory Council in the presence of MoO representatives.
The Council wishes to comment on the following regarding the said Oil and Gas Project:
1. We have notified the Ministry of Finance and the Ministry of Planning and Coordinated Development and other concerned entities in order to benefit from their views on the Project in accordance with part (b) of para (Second) of Article (5) of the law on State Advisory Council No. 65 of 1979. In view of the fact that no replies have been received despite follow ups, and in consideration for the continuing pressure on the Council to accelerate its evaluation of the Project, the evaluation has been made without waiting for replies from the said entities.
2. The Council has asked the representatives of the MoO to supply it with copies of the model contracts referred to in the proposed law in Arabic without having received such contracts.
3. The Council has not had an opportunity to look into the preparatory work for the Project.
4. There are amendments to the Constitution concerning oil that may have relevance to the Project. This requires that the enactment of the Project should await the enforcement of these amendments.
5. The Council is of the opinion that the authority to grant exploration development and production licenses is confined to the central authority (federal) on account of oil and gas being the property of the Iraqi people, and the Government representing the whole of the Iraqi people. In addition, the provinces and governorates have no competence in this respect.
6. Some of the articles of the proposed law provide the Iraqi National Oil Company with a great role despite the fact that it has not yet been established and its work organized. This requires the preparation of a law for the Iraqi National Oil Company and its enactment before the proposed Oil and Gas Law comes into effect.
7. It is necessary to clarify part (f) of para (second) of Article (13) as well as para (second) of Article (19) to show that the participation of the Iraqi National Oil Company in exploration, development and production operations related to appendices (3) and (4) to the proposed Oil and Gas law do achieve the interests of the Iraqi people in a way that would not waste the interests of Iraq in accordance with the law for nationalizing the Iraqi National Oil Company No. 69 for 1972 and the Law for designating Investment Areas for Oil companies No. (80) of 1961.
8. The periods referred to in Article (21) of the Proposal do not serve the interest of Iraq at the present. The Council is of the opinion that they should be reduced.
9. Para (
of Article (22) of the Project should be revised as follows: (eight) Priority goes to the Ministry in owning produced oil and gas or their transportation by pipelines in accordance with the arrangements and rules agreed upon with the Ministry), instead of (giving …….)
10. The Royalty designated in part (1), of para (First) of Article (41) of the Project which is (12,5%) diverges from the level advocated by OPEC at (16%)
11. A provision should be added to Article (41) to require foreigners to deposit the proceeds from the sale of their share of petroleum in Iraqi banks prior to exporting these proceeds through the said banks in accordance with the Iraqi Law.
12. The Council is of the opinion that efforts should be concentrated on lifting the UN Security Council resolution No. (687) of 1991 according to which the Compensation from Oil Revenue Fund was established.
13. The Council is of the opinion that the law should encompass processing as well as petroleum products so as to ensure comprehensive coverage.
The Minister has been oriented.
Ghazi Ibrahim Al-Janabi
31/5/2007
Enclosures
Law Project
4 Enclosures
Copy to:
MoO- Minister’s Office
.
KRG declaration
3- The Spokesman
Kurdistan Regional Government
The Kurdistan Regional Government (KRG) is pleased to publish the final draft of the Kurdistan Region Petroleum Law in ARABIC and ENGLISH, which has now been approved by the Legal Committee of the Council of Ministers. In its next meeting the Council of Ministers will review the law and is expected to put it to the Kurdistan National Assembly (parliament) for approval.
The first draft of this law was published in August last year, and has benefited from extensive comments from petroleum companies, NGOs, and citizens of the Kurdistan Region and other parts of Iraq.
The KRG is also pleased to publish its final Kurdistan Region MODEL PSC, , which was also first published in August last year and received significant input from many experts to make sure that it meets international standards as well as being consistent with the draft law. Dr. Ashti Hawrami, the KRG Minister for Natural Resources, said, “This model contract will form the basis for all our future negotiations and contract awards in Kurdistan and some of the existing contracts have also been adjusted using this Model Contract.”
The Iraq Constitution grants petroleum administration powers to the Kurdistan Region. "The Kurdistan Region Petroleum Law will be a great step forward for the Kurdistan Region and for all of Iraq. It is a modern, simple, unambiguous and investor-friendly law that will attract experienced operators to the region to maximise timely financial returns for all the peoples of Iraq", commented Minister Hawrami.
A federal draft Oil and Gas Law for Iraq was agreed earlier this year, but its approval has been delayed until an acceptable formula is found for revenue sharing and until the role of the Iraqi National Oil Company (INOC) is defined – in other words, the Annexes to the law. “On that front, we are very pleased with the outcome. Firstly, last week an agreement was reached with Baghdad on the draft revenue sharing law, and secondly we have now resumed our discussions on the INOC and we are confident that this will be agreed upon soon”, said Minister Hawrami.
He added, "In the KRG, we look forward to implementing this regional Law, which will be in harmony with the federal Law once it is finalised in a consistent manner with the Iraq Constitution. Partnership between the KRG and the Baghdad Government on modern petroleum administration, and on revenue sharing, is the best hope for Iraq.”
The KRG is also publishing the details of some 40 new BLOCKS and their COORDINATES, and the basic COMMERCIAL TERMS that it will use in negotiations to award contracts to qualified investors.
Dr. Hawrami said, ”When the draft Kurdistan Region Petroleum Law goes to the Parliament, we will organise conferences soon in Erbil, London and maybe in Houston to clarify the tendering process. Priority will go to those companies who can move and organise themselves quickly to contribute to our stated goal of a daily production level of one million barrels of new oil from the Kurdistan Region in around five years time,” said Minister Hawrami. “This way we shall be making a great contribution to Iraq’s revenues to be shared by all, hence assisting with the reconciliation process and Iraq’s unity.”
Latest on the Iraq petroleum law- June, 2007
I have given this June draft text a first reading, explored the source of it and come to the following tentative conclusions:
This June petroleum draft represents a step in the right direction as it has placed the Federal government, the Council of Ministers, its Oil and Gas Council (FOGC) and its think tank in a stronger decision making position visa vis the regions and governorates. It also widened the bidding to ensure covering procurements by the operating companies and enhanced the transparency aspects. It has deleted the shameful clause which required the makeup of members of the FOGC to conform to the sectarian and ethnic division.
And, it has clarified and strengthened the Federal government role over attachments 3 (discovered but undeveloped far from the present pipeline system) & 4 (the 65 exploration blocks) as it spelled out firmly INOC’s participation therein. However, it seems to have slipped in its authorising INOC to enter into "other forms of contracts" beside the service model contracts.
It has tightened the legal language and placed, justifiably, some of the definitions into the articles concerned.
Its main weaknesses, among others, is leaving the development of discovered fields in attachment 3 and future exploration as in attachment 4 to the to regions and governorates. Furthermore, it left unchallenged (a cause for change in the constitutional review) the interpretation of article 112 of the constitution, by exclusion, under the jurisdiction of the of the Regions and Governorates.
It is also surprising that it has ignored the vital verdict of al-Shoura Council that: examination of the draft petroleum law by the parliament ought to be deferred until such time when the review of the constitution is finalised.
But this June draft appears, more or less, in line with the Majles al-Shora'a commentary. As such, the political power pockets who indulged in the self-oriented mutual concessions of the infamous "Muhasasa" would likely reject it and insist on their Feb/March text.
The pivotal question, however, remains: is the judgement of the Majles al-Shoura'a binding on the government or not? It remains to be seen.
Having read the latest from KRG, I must add, however, that it would be a great folly if this illegal declaration of KRG and pursuit to go ahead, unchallenged, with their own grant of rights for exploration and development of additional 40 exploration blocks, as if they are no part of Iraq State; apparently returning to their old interpretation of the constitution that "what is in Kurdistan is theirs to manage their own way." They seem to forget that they have been living on the oil production from the south for the last few years. That is how it should be as oil and gas wealth are God’s gift to the nation all the nation not any one part of it.
Tariq
TES/2nd July, 2007.
Covering Letter
1- Internal Memo
No. ………….
11. 06 2007
Republic of Iraq
Council of Ministers
To: The Secretary of the Council of Ministers
Subject: Oil and Gas Law Project
Proposing Authority: Oil and Energy Committee
Subject: Oil and Gas Law Project
Reasons: To develop the Oil Industry through the participation of foreign and local investors of reliable operational and technical competence that would help develop the technical national capabilities in the petroleum sector. Also to provide the Provinces and Governorates a role in petroleum operations and ensure participation by the commercial entities including an independent commercial national Iraqi oil company and the encouragement and support of the national private sector to participate directly or indirectly in the oil and gas sector.
Procedure:
First: The Council of Ministers has in its extraordinary session on 26/2/2007 decided to refer the Project of Oil and Gas which had been prepared by the Oil and Energy Committee to the Advisory Council for review with the entities concerned. The Project was sent to the Council in accordance with a letter dated 28/2/2007.
Second: We have received the internal memorandum from the Ministries Affairs Department dated 6/6/2007 with a letter from the State Advisory Council No. 911 dated 31/5/2007 to which was attached the oil and Gas Project with its 4 Enclosures after having reviewed these documents in the presence of representatives from MoO and made the (13) comments in its above mentioned letter.
Third: We propose the submission of the subject to the Judicial Committee in preparation to submitting to the Council of Ministers for further action towards its enactment after having taken due consideration of the comments from the Advisory Council in its letter referred to above and especially comments (1, 2 and 6) of the letter.
2- The Verdict
Republic of Iraq
Ministry of Justice
State Advisory Council (Shoura Council)
Council of Ministers Secretariat – Legal Office
Subject: Oil and Gas Law Project
The best of Greetings,
Reference to your letter No. …….. dated 28/5/2007, we send you back the Oil and Gas Project and its four enclosures Nos. (1), (2), (3) and (4) after having been reviewed by the State Advisory Council in the presence of MoO representatives.
The Council wishes to comment on the following regarding the said Oil and Gas Project:
1. We have notified the Ministry of Finance and the Ministry of Planning and Coordinated Development and other concerned entities in order to benefit from their views on the Project in accordance with part (b) of para (Second) of Article (5) of the law on State Advisory Council No. 65 of 1979. In view of the fact that no replies have been received despite follow ups, and in consideration for the continuing pressure on the Council to accelerate its evaluation of the Project, the evaluation has been made without waiting for replies from the said entities.
2. The Council has asked the representatives of the MoO to supply it with copies of the model contracts referred to in the proposed law in Arabic without having received such contracts.
3. The Council has not had an opportunity to look into the preparatory work for the Project.
4. There are amendments to the Constitution concerning oil that may have relevance to the Project. This requires that the enactment of the Project should await the enforcement of these amendments.
5. The Council is of the opinion that the authority to grant exploration development and production licenses is confined to the central authority (federal) on account of oil and gas being the property of the Iraqi people, and the Government representing the whole of the Iraqi people. In addition, the provinces and governorates have no competence in this respect.
6. Some of the articles of the proposed law provide the Iraqi National Oil Company with a great role despite the fact that it has not yet been established and its work organized. This requires the preparation of a law for the Iraqi National Oil Company and its enactment before the proposed Oil and Gas Law comes into effect.
7. It is necessary to clarify part (f) of para (second) of Article (13) as well as para (second) of Article (19) to show that the participation of the Iraqi National Oil Company in exploration, development and production operations related to appendices (3) and (4) to the proposed Oil and Gas law do achieve the interests of the Iraqi people in a way that would not waste the interests of Iraq in accordance with the law for nationalizing the Iraqi National Oil Company No. 69 for 1972 and the Law for designating Investment Areas for Oil companies No. (80) of 1961.
8. The periods referred to in Article (21) of the Proposal do not serve the interest of Iraq at the present. The Council is of the opinion that they should be reduced.
9. Para (
of Article (22) of the Project should be revised as follows: (eight) Priority goes to the Ministry in owning produced oil and gas or their transportation by pipelines in accordance with the arrangements and rules agreed upon with the Ministry), instead of (giving …….)10. The Royalty designated in part (1), of para (First) of Article (41) of the Project which is (12,5%) diverges from the level advocated by OPEC at (16%)
11. A provision should be added to Article (41) to require foreigners to deposit the proceeds from the sale of their share of petroleum in Iraqi banks prior to exporting these proceeds through the said banks in accordance with the Iraqi Law.
12. The Council is of the opinion that efforts should be concentrated on lifting the UN Security Council resolution No. (687) of 1991 according to which the Compensation from Oil Revenue Fund was established.
13. The Council is of the opinion that the law should encompass processing as well as petroleum products so as to ensure comprehensive coverage.
The Minister has been oriented.
Ghazi Ibrahim Al-Janabi
31/5/2007
Enclosures
Law Project
4 Enclosures
Copy to:
MoO- Minister’s Office
.
KRG declaration
3- The Spokesman
Kurdistan Regional Government
The Kurdistan Regional Government (KRG) is pleased to publish the final draft of the Kurdistan Region Petroleum Law in ARABIC and ENGLISH, which has now been approved by the Legal Committee of the Council of Ministers. In its next meeting the Council of Ministers will review the law and is expected to put it to the Kurdistan National Assembly (parliament) for approval.
The first draft of this law was published in August last year, and has benefited from extensive comments from petroleum companies, NGOs, and citizens of the Kurdistan Region and other parts of Iraq.
The KRG is also pleased to publish its final Kurdistan Region MODEL PSC, , which was also first published in August last year and received significant input from many experts to make sure that it meets international standards as well as being consistent with the draft law. Dr. Ashti Hawrami, the KRG Minister for Natural Resources, said, “This model contract will form the basis for all our future negotiations and contract awards in Kurdistan and some of the existing contracts have also been adjusted using this Model Contract.”
The Iraq Constitution grants petroleum administration powers to the Kurdistan Region. "The Kurdistan Region Petroleum Law will be a great step forward for the Kurdistan Region and for all of Iraq. It is a modern, simple, unambiguous and investor-friendly law that will attract experienced operators to the region to maximise timely financial returns for all the peoples of Iraq", commented Minister Hawrami.
A federal draft Oil and Gas Law for Iraq was agreed earlier this year, but its approval has been delayed until an acceptable formula is found for revenue sharing and until the role of the Iraqi National Oil Company (INOC) is defined – in other words, the Annexes to the law. “On that front, we are very pleased with the outcome. Firstly, last week an agreement was reached with Baghdad on the draft revenue sharing law, and secondly we have now resumed our discussions on the INOC and we are confident that this will be agreed upon soon”, said Minister Hawrami.
He added, "In the KRG, we look forward to implementing this regional Law, which will be in harmony with the federal Law once it is finalised in a consistent manner with the Iraq Constitution. Partnership between the KRG and the Baghdad Government on modern petroleum administration, and on revenue sharing, is the best hope for Iraq.”
The KRG is also publishing the details of some 40 new BLOCKS and their COORDINATES, and the basic COMMERCIAL TERMS that it will use in negotiations to award contracts to qualified investors.
Dr. Hawrami said, ”When the draft Kurdistan Region Petroleum Law goes to the Parliament, we will organise conferences soon in Erbil, London and maybe in Houston to clarify the tendering process. Priority will go to those companies who can move and organise themselves quickly to contribute to our stated goal of a daily production level of one million barrels of new oil from the Kurdistan Region in around five years time,” said Minister Hawrami. “This way we shall be making a great contribution to Iraq’s revenues to be shared by all, hence assisting with the reconciliation process and Iraq’s unity.”